Taxation of Chargeable Gains Act 1992 section 38

Acquisition and disposal costs etc.

Section 38 defines the expenditure that can be deducted from the sale proceeds when calculating a chargeable gain on the disposal of an asset, and provides an exhaustive definition of allowable incidental costs.

• The allowable deductions are limited to the original acquisition cost (including incidental costs), enhancement expenditure reflected in the asset's state at disposal, costs of defending title, and the incidental costs of disposal.
• Incidental costs cover only professional fees (surveyors, valuers, auctioneers, accountants, agents, solicitors), transfer and conveyance costs (including stamp duty and stamp duty land tax), and advertising costs to find a buyer or seller.
• All expenditure must have been incurred wholly and exclusively for the purposes of the acquisition or disposal, and interest payments are not allowable except in the limited circumstances covered by section 40.
• Where the legislation assumes a notional sale and immediate reacquisition of an asset, no incidental costs are treated as arising from that deemed transaction.